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China to Invest $4.5 Billion in Industrial Parks for Bangladesh

To meet the growing domestic and global demand for Bangladesh-produced product, China said it plans to invest roughly $4.5 billion in two industrial parks there.

The industrial parks, one on 774 acres in Chittagong, the other on 500 acres in Dhaka, will be situated in two designated special economic zones.

According to the Daily Star, Bangladesh’s Executive Committee of the National Economic Council approved the proposed economic zones exclusively for Chinese investors.

“All Chinese investors are very interested to get a place inside the special economic zone. They’re competing with each other,” the Daily Star reported Ma Mingqiang, the Chinese Ambassador in Dhaka, as saying.

Bangladesh still ranks most competitive in terms of labor costs and investors want their share of the growing market.

Two-way trade between Bangladesh and China accounted for roughly $12 billion last year, according to the Daily Star, but Bangladesh’s portion of the exports were considerably lower than China’s.

In addressing the trade gap, the Chinese ambassador said the issue can’t be addressed singlehandedly as Bangladesh simply doesn’t produce enough. More Chinese investment, however, is expected to help balance the trade, and Ambassador Ma Mingqiang said China is looking into granting more duty-free access for Bangladeshi goods destined for China.

Currently, some Bangladeshi products benefit from duty-free privileges under the Asia-Pacific Agreement, formally called the Bangkok Agreement, which also includes India, Laos, Korea and Sri Lanka.

Bangladesh can export food stuffs and some machinery to China with tariff concessions, but as far as textiles, finishing agents, yarn from animal hairs, some knits and sewing machines are among just the handful of goods that benefit.

“Going forward, China-Bangladesh’s economic ties, mostly dominated by trade, could continue to drive their bilateral relations,” according to the Daily Star. “In the last five years, imports from China grew at about 20 percent and exports growth averaged at 40 percent. A back-of-the-envelope calculation, considering a moderate exports and imports growth scenario, indicates that China-Bangladesh trade could reach $30 billion by 2020.”

They key, however, will be boosting Bangladesh’s exports. If China can slacken some of its market access terms like rules of origin for Bangladeshi products, the country would be able to diversify its exports and access more of the Chinese consumer market.